A fierce competition in a financial services industry plays into the hands of credit card holders. Trying to make their plastics more beneficial, most credit companies provide a variety of free insurances. They will protect you if someone has used your card fraudulently or your purchases are damaged. However, many people are not even aware that such options exist. We will tell you about most popular free insurances and how they work. The insurance terms can vary depending on the credit card issuer, so don't forget to read your credit card's agreement to find out specific details.

Purchase protection

Pull a loose string on your new sweater and left with a big hole? Take advantage of purchase protection insurance. It protects eligible purchases against accidental damage, loss, or theft for up to 90 days from the date of purchase. The credit company will refund you the amount of the purchase (as shown on your store receipt or credit card statement) back onto your account.

Purchase protection gives you peace of mind when you are making purchases online. While the majority of Internet stores are legitimate, there are a few that can take your money and then don't deliver the goods. In these situations, your purchase protection insurance will assist you in getting a refund for the items.

Keep in mind that most policies have strict exclusions for certain types of damages. There is almost always a maximum limit to how much money can be refunded under the insurance.

Zero Liability for Fraudulent Charges

This insurance protects you in case you have become a victim of credit fraud. You won't be responsible for unauthorized charges made on your plastic as long as your account is in good standing. The rise of identity theft and credit card skimming makes this policy highly valuable.

Travel insurance

If you are going away on vacations, take your credit cards with you. Most of them offer a useful travel accident insurance, which will protect you if you have an accident - including emergency evacuation.

Some credit companies offer additional travel insurances. For example, Discover credit cards come with Lost Baggage Tracking which will help you locate lost luggage. The company will provide regular status updates until your bags are found. If your passport or other identifying documents needed to return home are stolen or lost, Passport and Travel Document Replacement will help you replace them.

There are other useful credit card insurances that are not so wide-spread. For example, Price Protection will refund you a portion of the purchase price if the product you bought drops in price within a certain period of time (typically 30 days).

American Express offers their customers the Refund Protection. If you are not satisfied with any eligible purchase you made with a credit card and the merchant won't take it back, the company will refund you the purchase price.

Obviously all of the above credit card insurance schemes are subject to time and monetary limitations, so check your credit card agreements for details. Additionally, you should also make sure that any purchases you make on your credit card abroad are also covered by the insurances.